Solo Mining: A Brief Review of Pros and Cons
Mining has been a highly discussed type of earnings in the cryptocurrency industry in the last couple of years. This concept includes not one or even two types of coin mining. In this article we will talk about SOLO mining, learn about its strengths and weaknesses, and also understand whether it is worth doing. Contents: (please, click the topic to scroll down to it)
- What is solo mining?
- Advantages and disadvantages of this type of mining
- What is better: solo or a pool?
1. What is solo mining?Unfortunately, it is impossible to give a 100% recommendation, which kind of cryptocurrency mining is the most profitable. Like the entire cryptocurrency market, the process of mining is very unstable, and the profit depends on a multitude of factors. So, solo mining is an exceptionally independent search for blocks and getting a full reward for it. If you choose the direction of solo mining, then your equipment will independently collect transactions in the block, sign them and search for nonce value.
2. Advantages and disadvantages of this type of miningThe undoubted advantage of solo mining without a pool is getting all the reward in one hand. If your equipment finds the required value of the block, you will get the whole profit, for example, it is now 12.5 BTC in the Bitcoin network. This is a fairly large amount of cash, even given the current drawdown rate. But, perhaps, this is the only advantage of this kind of mining, since it has two sides of the coin. The most offensive and unpleasant thing in this whole story is the chance that someone else get all of your money. For example, your computing equipment may be working on a certain block for a month, but another miner will find the necessary value by "happy" chance. In this case, all the reward will go to him/her, and you will be left with nothing. This possibility directly depends on the computing power of your equipment. Here everything is simple, a more powerful miner is more likely to find this nonce (because of the ability to process more data). For this reason, the vast majority of small and medium-sized miners work within pools, where all participants receive a stable reward, which corresponds to the computing power of the equipment. Today, solo mining of Bitcoin or any other high-capitalization coin is not the best idea. The fact is that due to the large number of participants, the complexity of the networks of popular cryptocurrencies has reached an unreal level. The probability of finding the unit alone is close to zero. Let's give a clear example of the chances of solo mining in the Bitcoin network with a relatively high hash rate (1 Pth/s). To make it more clear, a farm of this capacity will cost about $200k. This is without taking into account the huge bills for electricity and supplies. So, with 95% probability, after 200 days of continuous work, you will be able to find the value of a block and get 12.5 BTC. This is provided that the complexity of the network during this time will not grow or someone else will not find the value of a nonce before you. 100 times more capacity is required to find a new block every day, and this is an investment of millions or even tens of millions of dollars.
3. What is better: solo or a pool?We all love stability and reliability, if, of course, such concepts are applied correctly to the cryptocurrency industry. But still, it's much safer to receive new coins every day than to be in a state of uncertainty six months or more, without any guarantee of success. And if you do not have tens of millions of dollars in seed capital, you will be better off joining a mining pool. Every year the of network complexity of popular cryptocurrencies is growing at a high pace, for example, in 12 months it has increased for:
- Ethereum by 30 times;
- Bitcoin by 4 times;
- Litecoin by 15 times;
- Dash by 150 times.